Cebu's shipping foothold weakens with sale of ATS

Although deemed as brave and wise move for the Aboitizes to give up its shipping business, Cebu business leaders are however saddened by the development, as it will badly affect Cebu’s stronghold of the country’s shipping industry.

"The shipping industry has been known to be dominated by Cebuano families," said Jay Aldeguer, president of the Philippines Retailers Association (PRA-Cebu) and the Aboitizes are part of it.

Likewise, Jay Yuvallos, president of the Confederation of Exporters in the Philippines-Cebu (Philexport) said Aboitiz Equity Ventures divestment of its shipping industry is a loss, adding that the Aboitizes have been known as a company of good standing and delivers what it promises.

However, the two business leaders lauded the bold move of the Aboitiz Group that despite the "sentimental value" of being known as the leader in the shipping industry for the last 100 years is put to an end for the sake of "business principle."

"The Aboitiz family knows what they are doing. ATS [Aboitiz Transport System] has always been one of their weakest companies so it makes sense to let go of a company especially if the offer is good," Aldeguer added

Cebu-based conglomerate AEV announced recently that it has decided to sell its shipping and logistics company, the Aboitiz Transport System Corp. (ATS) to KGLI-NM Holdings Inc. (KGLI-NM).

KGLI-NM is a joint venture between domestic company Negros Holdings and Management Corp. and Dutch company KGL Investment BV.

ATS will be sold at its equity value of P5 billion or equivalent to P2.044 per share. It is an integrated transport service arm of Aboitiz and Company (ACO) and owned by publicly listed arm AEV.

Also, Yuvallos said although it could mean a loss to Cebu's dominance in the shipping industry, the move has a good indication saying "the interest of a foreign investor on ATS is a sign that the country's shipping industry has potential."

"They are not going to invest if the industry is not doing well, and the investment will not stop at just buying. Hopefully, they will invest further to modernize the fleet and bring in more cost-effective vessels that will bring down the cost of shipping and logistics in the country," Yuvallos stressed.

Cebu Business Club President Gordon "Dondi" Joseph, together with Cebu Chamber of Commerce and Industry (CCCI) Power Core Group chairman Carlos Co shared the same reaction, saying AEVs decision will benefit the country as well as pave the way for the company to zoom in its focus on the core business—which is power.

 "Power is very critical for our economic development," Joseph said.

"AEV knows that Cebu lacks in power supply. I'm sure they will invest more here (because they are based here)," said Co.

ATS (formerly WG&A) is one of the largest shipping companies in the country. It was formed via a merger in 1996 of William Lines Inc., Carlos Gothong Lines and Aboitiz Shipping Corp.

It had 23 running vessels, Superferry and Supercat, plying a route network of 29 ports of call and is the largest provider of domestic ferry transportation in the country on both the passenger and cargo business.

In the first semester of 2008, the ATS ended with a net income contribution of P19 million a 94 percent year-on-year decline from last year's P284 million. – Ehda M. Dagooc